This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The rule that an executor cannot bind the estate by his contract is intended for the protection of the estate. It is not intended to operate as a confiscation of anything of value which the estate may receive under such contract. In an accounting with the estate the executor must be credited with the value which has actually enured to the estate under such contract. The executors may reimburse themselves for debts of the estate paid by them.1 Thus, if executors who might have sold realty of their decedent to pay his debts which exceed his personalty, pay such debts out of their own funds they may be reimbursed thereafter out of the proceeds of the realty.2 So an executor who pays a judgment against decedent out of his own funds may be reimbursed out of the estate.3 So an executor who has given his own note for a debt of his decedent may be reimbursed out of the estate for the amount paid by him on such note.4 This right, however, is not an indirect means of enforcing the contract. The measure of recovery is the benefit to the estate; and not the contract itself. Thus executors cannot recover interest on money borrowed by them to pay debts o± the estate before they were due, which did not draw interest.5 If the property or services furnished by the adversary party has in fact enured to the benefit of the estate, there is some authority for holding that the creditor of the executor may apply to the court of probate powers for an order to the executor to pay the claim out of the estate, which application will, in a proper case, be allowed ;6 and more for holding that equity may enforce payment out of the estate, not strictly speaking on the contract, but for a reasonable compensation for the value of the services to the estate, or the property received by it.7 Thus if the executor borrows money, giving a note signed with his own name "as executor for" the decedent and uses such money to pay debts of the estate, the creditor may recover from the estate in such amount as has actually been expended to pay the debts of the estate.8 Since the amount recovered by the creditor is not credited to the executor this is in effect a method of subjecting whatever claim the executor may have against the estate to the payment of such claim. This right usually exists only when the executor is personally insolvent.
14 Moxon v. Jones, 128 Cal. 77; 60 Pac. 516.
15 Alsop v. Mather, 8 Conn. 584; 21 Am. Dec. 703; Wild v. Davenport, 48 N. J. L. 129; 57 Am. Rep. 552; 7 Atl. 295.
16 Botts v. Ban, 95 Ind. 243.
17 Willis v. Sharp, 113 N. Y. 586; 4 L. R. A. 493; 21 N. E. 705.
18 Grafton Savings Bank v. Wing, 172 Mass. 513; 70 Am. St. Rep.
303; 43 L. R. A. 831; 52 N. E. 1067.
19 As for costs: Bruning v. Golden, 159 Ind. 199; 64 N. E. 657; Moise's Succession, 107 La. 717; 31 So. 990.
1 Peter v. Beverly. 10 Pet. (U. S.) 532; Bolton v. Myers, 146 N. Y. 257; 40 N. E. 737; affirming 83 Hun (N. Y.) 259.
2 Bolton v. Myers, 146 N. Y. 257; 40 N.Y. 737.
3 Pursel v. Pursel, 14 N. J. Eq. 514.
4 Peter v. Beverly, 10 Pet. (U.S.) 532; Douglas v. Fraser, 2 McCord Eq. (S. C.) 105.
5 Nicholson v. Whitlock, 57 S. C. 36; 35 S. E. 412.
6 Kasson's Estate. 119 Cal. 489; 51 Pac. 706; Long v. Rodman, 58 Ind. 58; Baker v. Cauthorn. 23 Ind. App. 611; 77 Am. St. Rep. 443; 55 N. E. 963. Contra, Pike v. Thomas, 62 Ark. 223; 54 Am. St. Rep. 292;
35 S. W. 212 (overruling Turner v. Tapscott, 30 Ark. 312; Yarborough v. Ward, 34 Ark. 204); Ferrin v. Myrick, 41 N. Y. 315.
7 Hewitt v. Phelps, 105 U. S. 393; Mosely v. Norman, 74 Ala. 422; Pike v. Thomas, 65 Ark. 437; 47 S. W. 110; Norton v. Phelps, 54 Miss. 467; Thompson v. Smith, 64 N. H. 412; 13 Atl. 639; Leible v. Ferry, 32 N. J. Eq. 791; Willis v. Sharp, 113 N. Y. 586; 4 L. R. A. 493; 21 N. E. 705.
8 Dunne v. Deery, 40 Ia. 251.